June 1 (Bloomberg) — U.S. stocks rose, rebounding after the market’s biggest monthly slump in more than a year, as higher-than-estimated growth in construction spending and manufacturing overshadowed a drop in energy shares.
Wal-Mart Stores Inc. and AT&T Inc. led gains in the Dow Jones Industrial Average as the 30-stock gauge rebounded from a 98-point drop in early trading. Transocean Ltd. and Halliburton Co. fell more than 7 percent to help lead losses in energy shares after BP Plc failed to halt the flow of oil from a leaking Gulf of Mexico well. RadioShack Corp. rose on a report naming several private-equity firms as bidders for the company.
The Standard & Poor’s 500 Index increased 0.1 percent to 1,092 at 1:27 p.m. in New York. The S&P 500 lost 8.2 percent in May, its worst month since February 2009, on concern Europe’s debt crisis will hamper the global economic recovery and China will take more steps to cool its economy. The Dow rose 75.5 points, or 0.7 percent, to 10,212.13 today.
“The manufacturing sector is still showing some good growth despite the headlines from Europe and the perceived slowdown from China,” said Chris Hensen, part of a group that manages $3 billion of U.S. stocks at MFC Global Investment Management in Toronto. “If you get major selloffs on that I’d see it as an opportunity, because we’re getting down to valuation levels that are attractive.”
‘Normal Correction’
The S&P 500 has fallen 11 percent from a 19-month high on April 23 on concern that widening budget deficits in Europe could derail global growth. The five-week slide is consistent with a temporary pullback within a bull market, said Thomas J. Lee, the chief U.S. equity strategist at JPMorgan Chase & Co.
“It is a pretty normal correction in a bull market,” Lee said today in a Bloomberg Television interview. “It pays up to be a slow buyer here. If you start to get enough positive headlines to offset the negatives, that would be a way to build confidence. Investors are seeing good opportunities to buy, and that could be as a sign of potential capitulation as well.”
China, the world’s third-largest economy, is the world’s biggest consumer of industrial metals including copper and zinc, and the second-biggest consumer of crude oil after the U.S. Emerging economies such as China are driving the global economy, which the Organization for Economic Cooperation and Development estimates will expand 4.6 percent this year. Excluding those economies, the forecast is 2.7 percent.
Euro’s 4-Year Low
Also damping demand for equities in early trading, the euro touched a four-year low against the U.S. dollar after the European Union’s statistics office said the jobless rate in the 16-nation currency zone increased to 10.1 percent in April, the highest since June 1998. The currency has lost 14 percent of its value against the dollar this year as the ability of countries such as Greece, Spain and Portugal to avoid debt restructuring has discouraged investment in the region.
U.S. benchmark indexes reversed losses after the Institute for Supply Management’s factory index came in at 59.7 for May, topping the reading of 59 in a Bloomberg survey of economists. Commerce Department figures showed construction spending rose 2.7 in April after a gain of 0.2 percent the prior month. That exceeded economists’ estimates that it would remain even.
Manufacturing has been a leader in the U.S. economic recovery as demand from abroad strengthened and firms picked up production and spending to meet demand after a record drawdown in inventories last year.
Recovery ‘Sustainable’
“The underpinning of the economic recovery in the U.S. and emerging markets appear to be sustainable despite what’s going on in Europe,” said Jason Pride, director of investment strategy at Glenmede in Philadelphia, which manages $18 billion. “This is not a crystal-clear resolution that we’ll have enduring growth, because the debt bogeyman can peak around the corner and surprise anyone at almost any time.”
BP Plc of the U.K. plunged 13 percent in London, the biggest drop since 1992, after a failed attempt to plug the leaking well in the Gulf of Mexico.
Transocean , owner of the Deepwater Horizon rig that exploded April 20, beginning what has become the biggest-ever U.S. oil spill, declined 7.5 percent to $52.52. Halliburton, which provided oilfield services on the well, dropped 11 percent to $22.01. Anadarko Petroleum Corp., which owns a 25 percent stake in the well, lost 14 percent to $44.76 for the second- biggest drop in the S&P 500.